Is Your Business Healthy?
As a business owner, your goal is to nurture and grow a successful company. But maybe your goal should be aiming for a successful and healthy company; because unfortunately, “successful” doesn’t always equal “healthy.”
Yes, a successful business is profitable, and a successful business is growing. But a healthy business is also well managed, sustainable and resilient.
Looking Behind the Scenes
Here is what’s going on behind the scenes at healthy companies today:
Management strength: A healthy business isn’t overly dependent on its owner, and it doesn’t rely on the skills, talents, connections and drive of one individual. Instead, it has a well-defined management team in place, with each member doing his or her part in concert with others to form a flexible and cohesive unit that seeks excellence and continuous improvement.
Future-focused: Healthy businesses are ready for the future. Younger employees have a clear career path and are mentored by more seasoned executives. Middle managers are given the opportunity to lead important initiatives, make decisions and learn from their successes and failures. And senior executives help to shape industry affairs by serving on boards and sharing their experience with others.
Succession strategy: If you were suddenly taken out of the picture, what would happen to your company? Leaders of healthy companies think about succession and pave the way for future leadership. Whether the succession strategy involves the next generation of the family, an employee buy-out or a third-party sale, a plan is in place to secure the company’s future.
Defined goals: Healthy companies know where they’re going. A mission statement guides big-picture decisions, while each team knows and can articulate its goals, and measures its progress using key performance indicators (KPIs). Management regularly shares dashboard numbers so employees know how their effort and decisions impact the company’s position.
Information flow: A company’s communication patterns are an excellent indicator of health. In short, healthy companies deal with the truth. They encourage employee input and idea sharing, recognizing that executives may be too far from the front lines to know what’s really happening “out there.” They accept new ideas and encourage innovation.
Conflict resolution: Healthy businesses recognize that problems usually have several possible solutions. Executives don’t shy away from differences of opinion, but they also don’t allow those differences to blow up into battles of will. Instead, they address conflict head-on without blaming or shaming. They foster respectful debate and demand mature behavior and discourse in the workplace.
Good housekeeping: A healthy business has key legal documents and insurance policies in place and up to date. Its books are clean, with no personal expenses muddying the accounting picture. Internal controls reign and top executives set the ethical tone of the company.
What About Your Business?
Do these practices describe your business? If so, your company should be destined for a long, healthy life. If not, take steps now to improve the health of your company.
Remember, a truly healthy business will endure and self-perpetuate. A “successful” business — one that’s profitable today, but not set up for ongoing high performance — will eventually wither.
James E. Merklin?>
CPA/CFF, CFE, CGMA, MAcc
About the Authors
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